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After high-yield bonds, real-estate investment trusts, and leveraged loans comes yield's final frontier: the roughly $24 billion niche of business-development companies. These regulated, closed-end investment firms make loans to and invest in small, developing, or financially troubled companies. BDCs have stepped into a role that regional banks vacated during the financial crisis. BDCs often boast yields of 8% and higher, thanks to their REIT-like structure of paying out at least 90% of their taxable income as dividends. But these are not blue-chip dividend payers. Neither are the exchange-traded funds and notes tracking them.

BDCs are more like small- and micro-cap versions of yesteryear's yield-rich bank stocks, and one of the closest things to a private-equity fund the average investor can buy: They're heavy with illiquid, volatile assets.

Bulls lately emphasize the fact that many BDCs lend on a floating-rate basis, so they should enjoy some protection once interest rates rise. The trade-off: BDCs still drop like stocks in risk-averse markets. Another trade-off: When it comes to ETFs, you're actually buying a "fund of funds," since a BDC is itself a species of investment fund. Some BDCs pay hefty fees to external portfolio managers, just like expensive mutual funds.